- Woodside Petroleum Ltd. will merge its oil and gas operations with BHP Group as the largest miner prepares for a global shift away from fossil fuels and moves to plow $5.7 billion into a massive new fertilizer mine in Canada.
After the deal, a BHP shareholder will own about 48% of Woodside, the miner said in a statement Tuesday. The company announced also that it will replace its dual-listing structure with a single primary listing in Australia.
Chief Executive Mike Henry, who takes over in January of last year, is pivoting toward what BHP calls 'future facing' commodities - metals and minerals vital to global efforts to reduce emissions, electrify cities and feed a growing global population. The announcements on Tuesday help clarify a number of question marks for investors, who have been waiting years to get a decision on Jansen while the company has announced previously its dual listing was up for discussion.
BHP generates the bulk of its profits from iron ore and copper - metals that have been central to the green transition into energy - and has benefited from rising prices for both commodities over the past year. The company reported a final free cash flow record for the year until June and announced Tuesday that it will pay a record $0.1 billion dividend.
The commodity giant is getting out of oil and gas as fossil fuel industry grapples with global pressure from investors and governments over climate action that prompts some larger oil rivals to reduce their core production and add renewable energy assets. Whereas BHP has said it expects demand to remain strong for at least another decade, the company wants to avoid getting stuck with assets that will become more difficult to sell.
After years of protesting against the massive price tag, BHP finally approved the first stage of construction of Jansen Potash mine in Saskatchewan, Canada. The operation, which should first appear production in 2027, will make it one of the top producers of crop nutrients.
'Potash provides BHP with increased leverage to key global megatrends, including expanding population, changing diets, decarbonisation and improving environmental stewardship, the company said.
The industry has been focused on shareholder returns and debt reduction after being penalized by investors for overspending. Smaller rival Rio Tinto Group announced last month that it plans to expand its lithium mine in Serbia with the intent of building a lithium mine for $2.4 billion as well as expenditure on battery metals.
BHP has already spent about $4.5 billion on Jansen and dug two 1,000 - meter deep shafts. It weighed the risks of the planned investment but held off on a final development decision. This year, Potash prices have jumped amid strong demand, as well as concerns about supply after Belarus was hit by sanctions, one of a handful of producing nations.
Jansen approval follows BHP's announcement last month to buy a Nickel mine developer in Canada. It is also expanding existing nickel operations in Ecuador and building a stake in a copper company in Australia.
The BHP reported such a big dividend and profit as its competitors. Commodity prices soared in the past year as governments around the world unleash trillions of dollars in stimulus packages to help the global economy recover from the pandemic, boosting demand for raw materials.
The dual listing dates back to 2001, following the merger of U.K.-listed Billiton with Australia-listed BHP and saw the companies manage and run as a single entity with shareholders having equal economic and voting rights.
The structure had previously come under pressure by activist investor Elliott Management Corp. who argued in 2018 that a reorganization into a single company would add more than $22 billion in value to shareholders.
The underlying profit rose 88% to $17.08 billion for the year.